The quarterly report is an in-depth compilation of office leasing statistics and trends, major transactions, submarket comparisons, employment trends and investment and development trends specific to the Phoenix region.

Highlights from the 2016 Q3 Phoenix Office Market Report include:

As the market has tightened for tenants, leasing activity has slowed from the pace set in 2014 and 2015. Tenants have leased just 9.5 msf in the last four quarters, well under the long-term average of 11.0 msf. Net absorption fell slightly from 1.0 msf in the second quarter to 909,855 sf in the third quarter.

Average asking rents jumped again in the third quarter, up 1.1 percent to $23.16 and now 6.1 percent higher year-on-year. After declining for several quarters, the availability rate stabilized in Q3, unchanged at 21.5 percent.

Newly constructed buildings and build-to-suits have been the drivers of rent growth, as developers have sought to meet the requirements out-of-market corporations that need the latest amenities and building technologies to recruit top talent and establish a presence in the market. Asking rents are up by 10 to 15 percent in Downtown Tempe, Camelback Corridor, and in select best-in-class buildings in Old Town Scottsdale.

As more than 8,000 financial sector jobs have been added to the market in the last 12 months, Phoenix is benefitting from a push by many banks and financial services companies to pursue market share and to capitalize on lower costs of doing business. Following relocation from a higher-cost market, many of these companies have quickly expanded. After arriving to Phoenix in 2013, Union Bank executed a 72,715-square-foot expansion at Papago Buttes Plaza in Q3.

The 2016 Q3 Savills Studley Phoenix CBD Office Market Report can be found on Savills Studley’s webpage, as well as a national report and reports for each of the 29 major U.S. markets.